In the IS-LM Model, a Decrease in Government Purchases Leads

question 29

Multiple Choice

In the IS-LM model, a decrease in government purchases leads to a(n) _ in planned expenditures, a(n) _ in total income, a(n) in money demand, and a(n) _ in the equilibrium interest rate.

• A)decrease; decrease; decrease; decrease
• B)increases; increase; increases; increase
• C)decrease; decrease; increase; increase
• D)increase; increase; decrease; decrease

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Definitions:

Premium

The amount paid for an insurance policy or the amount by which a bond sells above its face value.

Discount on Bonds Payable

The discrepancy between a bond's face value and its sale price when it is sold below its face value.

Carrying Value

The book value of an asset or liability on a company's balance sheet, representing its original cost adjusted for any depreciation, amortization, or impairment.

Book Value

The value of an asset as recorded in the financial statements, calculated by subtracting any accumulated depreciation from the asset's original cost.